Market imbalances are resolved through two primary mechanisms: Time and price.

To be sure, the imbalance in new homes remains, despite a recent uptick in buying activity in real estate markets across the country. And as builders slash prices and time drags on, slowly but surely the backlog of newly constructed homes is being worked through.

New home sales ticked up 0.7% in August from the month before, registering the highest total in almost a year, according to Bloomberg. Although the increase was less than analysts expected, it continues the uptrend in place since this summer.

Meanwhile, prices keep falling. The median price of new homes tumbled 9.5% from July, the biggest drop since records began in 1963. This drop is primarily a result of homes less than $150,000 making up the lionshare of sales.

While the increase in sales is good news for market watchers eager to see inventory levels chewed through, fire sale prices push out any eventual recovery. Until it is economic for builders to build new homes, vacant land will remain exactly that, vacant, as landowners bleed cash on upkeep and maintenance. But in keeping new homes off the market, this correction will help speed up the broader housing recovery as inventories of all homes return to more manageable levels.

Optimism about the housing market is reaching near-unanimous levels. Sales of new homes in July rose 9.6%  from the month before, the biggest jump since the height of the housing boom in 2005. According to Bloomberg, inventories of new homes also fell to the lowest level in 16 years.

Purchase activity was the strongest in the Northeast, where sales leapt 32%. Meanwhile, out West, sales increased just 1%. This is an interesting trend to note, as thus far in the market’s correction the West has been a leading indicator for the rest of the country. That sales appear to be stagnating out West should be concerning for those hoping for a legitimate recovery.

The ultimate question is whether this bounce, which has been spurred largely by government intervention in the form of tax-incentives, low interest rates and support for the capital markets can be sustained through the traditionally slow fall and winter months. Time, it appears will be the true arbiter of the nascent housing recovery.

It’s been a long time since the housing market has set a record that wasn’t something like, “Worst since…,” “Biggest decline since…,” or “….since the Great Depression.” The Commerce Department reported today that sales of new homes leapt in June, up 11% from May. According to Bloomberg, the figure marks the biggest monthly gain since 2001.

Sales outpaced analysis expectations, and shares of US Homebuilders climbed in kind. Ryland Homes, Lennar, Toll Brothers and Pulte Home all posted strong gains on the day.

Some analysts are making bold statements 3 straight months of positive housing data.

“We’re barely past the housing bottom, this thing is still fragile. It’s premature not premature to talk about home prices bottoming — it’s somewhere in the next three to six months. There is a light at the end of the tunnel,”

said the chief economist at Deutsche Banks, Joseph LaVorgna.

Back on planet earth, readers of this site  know that saying something like “home prices bottoming” is a meaningless statement. Even as the hardest hit markets grope for a bottom as investors step in to take advantage of mispriced homes, many high-end markets are still in freefall. This dynamic will continue until well-to-do markets experience the same price discovery as have their lower priced brethren.

All in good time.